Reuters reported that Asian stocks extended a global sell-off on Wednesday as Italy's political crisis rippled across financial markets, toppling the euro to a 10-month low, pushing up borrowing costs for Rome and sending investors into safer assets such as US Treasuries.

Investors fear that repeat elections in the euro zone's third-largest economy — which could come as soon as July — may become a de-facto referendum on Italian membership of the currency bloc and its role in the European Union.

"The way Italy's short-term debt yields are spiking makes you think default risk is on radar in the market. It tells how grave the situation is. What the markets are starting to factor in is not a default per se but an early election leading to a victory of eurosceptics and an exit from the euro," Makoto Noji, senior strategist at SMBC Nikko Securities was quoted as saying.